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Ericsson's (ERIC) Solution to Boost Network Connectivity in Canada

Ericsson ERIC recently inked a five-year agreement with Videotron, a prominent telecommunication company in Canada to improve its network infrastructure. The telecommunication industry in Canada is highly competitive, with the very least concentration in the wireless market. Amid this situation, the ability to rapidly upgrade network infrastructure is vital for the companies to sustain their market share. In the recent venture with Ericsson, Videotron is aiming to enhance its service quality and strengthen its competitive edge in the dynamic telecommunication landscape.

Ericsson also has a decades-old presence in the Canadian market, offering advanced sustainable technology solutions to service providers in every generation of mobile communication. The latest long-term agreement with Videotron will further bolster its prospects in the region.

Digital connectivity is an essential element of modern life, enabling a vast array of applications such as remote learning, access to financial services, healthcare, e-commerce and more. However, Canada faces disparities in terms of connectivity and data speeds between rural and urban areas, leading to a loss of opportunity for rural clients. Ericsson’s solution will not only facilitate network upgrades, it will also improve the digital lives of Canadians by fostering digital inclusion.

Under the agreement, Ericsson will boost Videotron’s core network infrastructure. This will improve the company’s nationwide network capacity and equip it to better serve the growing number of subscribers. Ericsson will improve Videotron’s packet core to facilitate faster Internet speeds while upgrading its IP Multimedia Subsystem to enhance multimedia services such as voice over LTE and video calls. Advancements in Network Functions Virtualization Infrastructure will increase the network’s flexibility and scalability. Additionally, the incorporation of Ericsson Network Manager and Ericsson Network IQ will also improve Videotron’s network monitoring and management capabilities.

The integration of these advanced features will enable Videotron and its brand, Fizz, to provide consistent and reliable connectivity with faster data speeds. Ericsson will also provide continuous network upgrades and expansion for future technological advancements. The deal accentuates growing demand for Ericsson’s comprehensive networks portfolio. The company has experienced significant headwinds in North America in the past few quarters. This recent collaboration will likely improve its net sales in the region.

With the emergence of the smartphone market and the subsequent usage of mobile broadband, user demand for coverage speed and quality has increased exponentially. Further, to maintain performance with increased traffic, there is a continuous need for network tuning and optimization. Ericsson is much in demand among operators to expand network coverage and upgrade networks for higher speed and capacity. The company is reportedly the world’s largest supplier of LTE technology with a significant market share and has established a large number of LTE networks worldwide.

The company focuses on 5G system development and has undertaken many notable endeavors to position itself as a market leader. It believes that the standardization of 5G is the cornerstone for digitizing industries and broadband. Ericsson expects mainstream 4G offerings to give way to 5G technology in the future. It currently has 162 live 5G networks across the globe, spanning 69 countries.

The stock has gained 14.2% over the past year compared with the industry’s growth of 43.7%.

Zacks Investment Research
Zacks Investment Research


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Zacks Rank & Stocks to Consider

Ericsson currently carries a Zacks Rank #3 (Hold).

NVIDIA Corporation NVDA, sporting a Zacks Rank #1 (Strong Buy) at present, delivered a trailing four-quarter earnings surprise of 18.43%, on average. In the last reported quarter, it delivered an earnings surprise of 11.48%. You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company’s focus evolved from PC graphics to AI-based solutions that support high-performance computing, gaming and virtual reality platforms.

Arista Networks, Inc. ANET, sporting a Zacks Rank #1 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 15.68% and delivered an earnings surprise of 15.39%, on average, in the trailing four quarters.

The company holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200 and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.

Silicon Motion Technology Corporation SIMO, sporting a Zacks Rank #1 at present, delivered a trailing four-quarter average earnings surprise of 4.72%.

The company is a leading developer of microcontroller ICs for NAND flash storage devices. The semiconductor company also designs, develops and markets high-performance, low-power semiconductor solutions for original equipment manufacturers and other customers.

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